I was able to find the actual pdf file of the study but it is on my iPhone. Quite an optimistic view of retirees! It almost seems as if only BH were included in that study. Oh, and it is confirmed that highest increase in the activity happened in "watching TV"; Retirees spend 3 hours/day in front of the TV. I do not see how that could be right because then they would have no time left to be on the facebook or on tweeter or in front of phone

Reading and really looking at the graphs, it makes it pretty obvious that ultra high net-worth retirees are skewing the results. When there is over 3X difference between median and mean, using mean numbers is no longer representative of the data. Average retiree's net worth in 2016 is about $200K *including* the primary home.

Figure 1 50th percentile in this link would correspond to the 2016 federal reserve data set update, but the plot scaling makes it difficult to discern a value for the near-retirement age subsets. Maybe its up to $20K-$25K retirement savings for near-retirement households (age 56-61). Party time!

Many people may have a 401k/403b *and* an IRA.
Some may also have more than one of each (or add in a Roth for some).

But also importantly, because these are *individual* accounts, for couples, there could easily be one or several for each spouse, further diluting the "total" available for retirement.

Also, what about the cost of living area?
Yes, people can move, but in general, something like $1m in NYC/SF is quite different from the same amount in a low or very low cost of living area.
We are in a very high cost of living area, and it still catches me by surprise when I read here about some housing costs.
In a surprising number of cases, the figure cited would barely buy a prime (or semi-prime) parking spot near here.

I doubt we'll leave the area, for several important reasons, but it's a shame, because if we did move to a much lower cost of living area, wow... we could travel a *lot* more!

Reading and really looking at the graphs, it makes it pretty obvious that ultra high net-worth retirees are skewing the results. When there is over 3X difference between median and mean, using mean numbers is no longer representative of the data. Average retiree's net worth in 2016 is about $200K *including* the primary home.

Yet another "fake study" Sorry for creating this topic.

Good catch. You are correct that we would not be talking about a normal distribution around a mean when the mean is so greatly different from the median.

The underlying problem is the dramatic skew.
There are some phenomenally wealthy people, but there aren't the same types of "phenomenal negative wealth" folks.

I don't claim to have a degree in statistics but I believe one does not need "negative" samples to have standard distribution.

I think you mean "standard deviation" not "distribution"?

However, I never stated anything like what you seem to be suggesting (which isn't quite clear).

My point about the lack of "extreme negatives" was to show the underlying problem in *this* case, which is the very extreme positive values that are *not* balanced by negatives.
It's the *skew* that is the problem.

IF there had been a relatively symmetric distribution (suppose there "could have been" vast negative wealth, or use some other variable of choice) with a very large standard deviation, there would not be such a difference in the mean and median.
That is the point.

Extreme "positive" values do need to be balanced by extreme "negative" values provided we are talking about relative values from the md-point and not the absolute positive or absolute negative. I suspect we are saying the same thing.

The degree of inequality is more pronounced among this age group: The 90th percentile of households holds around $855,000, while the 95th percentile (not shown in the figure) holds almost $1,470,000."

I believe the 1st statement to be true but why does the author think that the 2nd statement demonstrates the 1st statement?

Especially given the earlier statement:- "The balances of the 70th and 80th percentiles improve to about $148,000 and $320,000, respectively. " which he did NOT think illustrated the degree of inequality.

Is this the usual case of not having mathematical background but still churning out the scholarly looking papers?

The degree of inequality is more pronounced among this age group: The 90th percentile of households holds around $855,000, while the 95th percentile (not shown in the figure) holds almost $1,470,000."

I believe the 1st statement to be true but why does the author think that the 2nd statement demonstrates the 1st statement?

Especially given the earlier statement:- "The balances of the 70th and 80th percentiles improve to about $148,000 and $320,000, respectively. " which he did NOT think illustrated the degree of inequality.

Is this the usual case of not having mathematical background but still churning out the scholarly looking papers?

Possibly because the movement of one full decile (from 70th to 80th percentiles) is associated with a doubling of wealth, while a movement of half of a decile (from 90th to 95th) is associated with an increase in wealth of about 72%. If you plot in logs, you will see a steepening curve as you move up the income distribution. I haven't looked to see whether the steepening is greater for this age cohort than for the other age cohorts, but I assume it is given their statement. Probably should check, though.

"the households with heads ages 56-61 accumulate more savings, but the underparticipation problem persists.

The median of this group holds only around $25,000.

The balances of the 70th and 80th percentiles improve to about $148,000 and $320,000, respectively.

The degree of inequality is more pronounced among this age group:

The 90th percentile of households holds around $855,000, while the 95th percentile (not shown in the figure) holds almost $1,470,000."

What's also disturbing about figure 1 at the 50th percentile is that the (eyeballed) $25K balance for households age 56-61 drops to nearly zero for households age 62-67. The take home message I get is that typical near-retirement age households have minuscule levels of retirement savings and that with a few years around retirement age those small balances are depleted to essentially nothing.

The low-inflation conditions of the last 20 years most probably have been a boon for people with mostly fixed income streams.
I imagine those who retired in 1970 had a hard time (unless they had pensions, which of course were much more common then).

It's also scary hearing (as posted earlier) how everyone up to around the 90th percentile retires with less than about a quarter-million dollars, which is basically zero in terms of income generating power.

Possibly because the movement of one full decile (from 70th to 80th percentiles) is associated with a doubling of wealth, while a movement of half of a decile (from 90th to 95th) is associated with an increase in wealth of about 72%. If you plot in logs, you will see a steepening curve as you move up the income distribution. I haven't looked to see whether the steepening is greater for this age cohort than for the other age cohorts, but I assume it is given their statement. Probably should check, though.

I expect that a Fed economist has a decent math background.

Exactly, it is expected to asymptotic. I

If that Fed economist thinks his data is showing unusual pattern as described above, I think he needs to go back to school. If the second band had shown 10x increase, then it would have been significant. But if there were 10x difference between say 98-99 band and 99-99.99 band, that will be NOT be anything out of ordinary.

I was able to find the actual pdf file of the study but it is on my iPhone. Quite an optimistic view of retirees! It almost seems as if only BH were included in that study. Oh, and it is confirmed that highest increase in the activity happened in "watching TV"; Retirees spend 3 hours/day in front of the TV. I do not see how that could be right because then they would have no time left to be on the facebook or on tweeter or in front of phone

Another little nit to pick. Paraphrasing, "Today's retirees have nearly 100% more savings, on average, than those from 30 years ago." Then the $752,000 today, implies they averaged $376, 000 30 years ago.

Plug $752k into the CPI calculator for March 2018, and what do we get for equivalent in March 1988? $351k.

So after inflation , there's not much change at all after 30 years. If anything, they're a bit worse off today!

Possibly because the movement of one full decile (from 70th to 80th percentiles) is associated with a doubling of wealth, while a movement of half of a decile (from 90th to 95th) is associated with an increase in wealth of about 72%. If you plot in logs, you will see a steepening curve as you move up the income distribution. I haven't looked to see whether the steepening is greater for this age cohort than for the other age cohorts, but I assume it is given their statement. Probably should check, though.

I expect that a Fed economist has a decent math background.

Exactly, it is expected to asymptotic. I

If that Fed economist thinks his data is showing unusual pattern as described above, I think he needs to go back to school. If the second band had shown 10x increase, then it would have been significant. But if there were 10x difference between say 98-99 band and 99-99.99 band, that will be NOT be anything out of ordinary.

I looked back at the article, and I think that they just should have reported the same measures for all of the cohorts, so that we could see how the Gini coefficients compare across cohorts. You could post an article on the blog and ask them to back it up!

I think we all agree that the article itself is all bogus in its premise. As one responder already chimed, "UHNW retires never had it better!" should have been the correct title of this so called study.